The Zhitong Finance app learned that after the beginning of winter, the cold tide hit, and temperatures dropped significantly everywhere. According to the weekly influenza report issued by the China Center for Disease Control and Prevention, the positive influenza virus test rate continued to rise in the southern and northern provinces. Industry insiders pointed out that the recent upward trend of the influenza epidemic may trigger an increase in public and market attention, thereby driving an increase in demand surrounding influenza, including influenza vaccines, virus testing, and cold medicine, bringing new catalysts to the performance growth of related enterprises. In the secondary market, on November 24, Hong Kong influenza concept stocks strengthened. By the close, Dongguang Changjiang Pharmaceutical (01558) rose 8.64% to HK$10.06; Shandong Xinhua Pharmaceutical (00719) rose 4.91% to HK$6.20; Federal Pharmaceutical (03933) rose 1.90% to HK$8.06; and Hehuang Pharmaceutical (00013) rose 0.83% to HK$30.4.

On the evening of November 22, the phrase “fever” topped the Weibo Hot List and received widespread attention from netizens. Recently, news of school closures and overcrowding of hospitals has also surfaced in many parts of the country. On November 23, the website of the National Influenza Center of China published the 779th China Influenza Surveillance Weekly Report for the 46th week of 2023. Surveillance data show that in the 46th week of 2023 (November 13, 2023 to November 19, 2023), the positive influenza virus test rate in the southern and northern provinces continued to rise, mainly for the A (H3N2) subtype, followed by the B (Victoria) strain. An outbreak of 205 influenza-like cases has been reported nationwide.

Furthermore, due to the joint attack of various pathogens such as mycoplasma pneumoniae, influenza virus, respiratory syncytial virus, adenovirus, and parainfluenza this year, many people have even experienced “mixed infections” with two or more viruses.

From November 14 to 21, the number of patients treated at JD Health Internet Hospital increased markedly, and the number of consultations related to “influenza, mycoplasma, and fever” increased 180% over the previous week. In the same period, JD drug purchase data showed that demand for influenza test kits, fever-reducing drugs, and influenza A drugs surged in offline stores of JD pharmacies in the Beijing region, and orders related to colds and fevers increased 134% over the previous week.

It is worth noting that on November 23, the Central Meteorological Observatory continued to issue a cold tide warning. According to the forecast, the cold tide will continue to descend southward in China, and widespread cooling will reach many parts of Jiangnan. A new wave of cold waves and cooling is expected to speed up the spread of the influenza epidemic to some extent.

The high incidence of influenza is driving an increase in medical demand surrounding influenza. Judging from the conceptual subdivision of influenza, the short-term demand for influenza vaccines may be expected to grow rapidly. In the long run, due to the low penetration rate in the country, there is huge room for future growth in the industry.

Zhu Yizhang, an analyst at CITIC Securities, said that influenza vaccine sales in the past two years have been affected by COVID-19 related factors. The peak influenza vaccine sales season in the northern hemisphere was concentrated in September-December. In the second half of 2021, the influenza sales season was affected by factors such as COVID-19 booster vaccinations and COVID-19 vaccine supplements for children under 12, and influenza vaccine sales were greatly affected. In the second half of 2022, due to a sharp increase in the number of people infected with COVID-19, demand for influenza vaccination decreased, which affected influenza vaccine sales that year. The suppression factors over 2023 have all been removed, and the COVID-19 pandemic is unlikely to recur on a large scale. At the same time, the COVID-19 pandemic has increased people's attention to respiratory infectious diseases, which may increase demand for influenza vaccination.

Lin Xiaowei, an analyst at Everbright Securities, believes that the influenza vaccine is a golden race track for the birth of major global varieties, but the penetration rate of this field is still low in the country, and there is still huge room for growth in the future. As the fall and winter temperatures cool down this year and the high influenza season approaches, it is expected that demand for influenza vaccine terminals will increase, and the performance and market attention of related companies will be strongly boosted.

Virus testing is also one of the main areas of short-term benefit. Lin Xiaowei said that the demand for differential diagnosis of respiratory infection viruses is expected to drive the performance growth of related companies. Currently, COVID-19 infections still occur from time to time. With the arrival of autumn and winter, influenza A virus, influenza B virus, and respiratory syncytial virus are also gradually becoming active. Since symptoms after respiratory virus infection are similar, rapid and accurate differential diagnosis is important for subsequent targeted treatment. Therefore, companies with respiratory virus testing products are expected to benefit.

Related concept stocks:

Dongguang Changjiang Pharmaceutical (01558): In March of this year, the Daimo Research Report pointed out that as the main manufacturer of the anti-influenza virus drug “oseltamivir” in the mainland, Dongyang Pharmaceutical's performance was directly driven by the actual spread of influenza and related expectations.

Clover Bio-B (02197): Clover Biotech recently announced that the company has completed a marketing declaration for its seasonal influenza vaccine to Brazil's National Health Supervisory Authority. Once approved, the company will work further with local partners in Brazil to commercialize the influenza vaccine in Brazil. The company said that once the vaccine is approved in Brazil, the commercialization of the company's seasonal influenza vaccine will expand to the southern hemisphere and win the sales market for the influenza season in the first half of the year in the southern hemisphere. This will complement the sales market for the influenza season in the second half of the year in the northern hemisphere, such as China, so that the company's seasonal influenza vaccine can win a full-year sales cycle and increase sustainable profits.

Xiansheng Pharmaceutical (02096): Xiansheng Pharmaceutical announced that on October 10, the Group signed a cooperation agreement with Jiaxing Anticonn Biotechnology Co., Ltd. (Anticonn) on the innovative drug ADC189. Under the agreement, the Group will receive exclusive commercialization rights for the product in China for influenza indications. This cooperation will further strengthen the Group's product layout in the field of anti-infection.